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Bullion

Keywords

Asymmetric, Trade flows, monetary policy, Business cycle asynchronization, ECOWAS

Abstract

The formation of the West African Monetary Union which was initially slated for 2003 was postponed severally in 2005, 2009, 2015 and 2020. This raises the curiosity of investigating the possibility of its formation beyond 2020. It is against this backdrop that this paper investigated asymmetric trade flows, monetary policy and business cycle asynchronization among ECOWAS member countries: Feasibility of ECOWAS Monetary union formation beyond 2020. The objective was addressed using Pearson correlation analysis on computed zscores and the seemingly unrelated regression estimation (SURE). The finding shows that the flow of trade within ECOWAS member countries were highly asymmetric indicating that these economies rely more on transaction with other developed economies. Therefore, the harmonization of the regional trade flow to enhance business cycle synchronization that will transmit into common currency formation has not been achieved simultaneously by all ECOWAS member countries. Also, the findings revealed that it is difficult to achieve primary and secondary convergence criteria simultaneously among the West African Monetary Zone ﴾WAMZ) and West Africa Economic and Monetary Union (WAEMU) member countries. On this basis, the paper recommends that, countries that is highly symmetric under WAMZ like Nigeria, Ghana and Guinea and WAEMU like Burkina Faso-Mali, Cote d'Ivoire-Guinea Bissau, Cote d'Ivoire-Mali, Cote d'Ivoire-Senegal, Cote d'Ivoire-Togo, Guinea Bissau-Mali, Guinea Bissau-Senegal should form the West African Monetary Union beyond 2020 and subsequently others that meet the criteria can catch up.

Author Bio

Dr. Joseph Okwori and Dr. Ugwuoke O. Walter are staff of Department of Economics, Federal University, Lafia, Nassarawa State.

Publication Title

CBN Bullion

Issue

3

Volume

45

First Page

16

Last Page

29

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